Robert Jackman

Don’t write off the High Street just yet

Don’t write off the High Street just yet
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Over the past ten years, few industries have faced changes as dramatic as retail – and, in particular, the British high street. While the high street itself remains a much-loved institution, it seems that hardly a week passes without another reminder of the unprecedented changes – from consumer habits to technology – it currently faces.

On one hand we hear stories about the challenges for British retailers – from squeezes in living standards to the closure of major chains like Toys R Us, it seems some of us have become conditioned to expect the worst. But at the same time there are the success stories – like the new wave of independent retailers, over half of whom say they are optimistic about the sector’s future.

So what’s really going on? With the support of Visa, The Spectator hosted a roundtable lunch, bringing together guests with first-hand knowledge of the British retail sector, as well as politicians  responsible for its success, to assess the health of Britain’s high streets and to see what politicians, businesses and communities can do to make things even better.

Someone who understands the topic more than most is retailer Mary Portas. As the eponymous star of BBC Two’s Mary Queen of Shops, she helped dozens of struggling independent retailers to revamp their outlets and, in 2011, was hired by the government to conduct the first major review into Britain’s high streets.

Like most participants, Mary felt that the headlines were failing to tell the full story of the British high street. While changes in technology and consumer habits had undoubtedly changed the shopping experience, it wasn’t necessarily true that high street retailers were being left behind by these trends.

Take online shopping, for example, which now accounts for around 18% of UK retail transactions, up from 5% in 2008. With the explosive growth of Amazon, many have been quick to predict that the internet giants will come to dominate British retailer, leaving shops – and high streets more broadly – left behind in the dust.

The problem is, though, this isn’t quite true: in fact, the growth in online sales could well be good news for high street retailers – as Michael Weedon, who chairs the retail policy unit of the Federation for Small Businesses, explained.

While there was an often an assumption in the media that online sales were always at the expense of traditional retailers, in fact many were one and the same. Online sales were particularly important to smaller retailers, he explained, many of who use the likes of Amazon, eBay and Etsy to reach customers all over the world.

And this isn’t the only way that smaller retailers are using technology to grow their businesses. The importance of social media – particularly Twitter, Facebook and Instagram – to smaller retailers was mentioned by several participants, with some suggestions that local councils could play a role in supporting smaller shops to promote themselves online.

Of course, not everything is so positive. One of the grievances expressed by several participants was the perceived unfairness of business rates – something on which the British Retail Consortium, whose chief executive Helen Dickinson attended the lunch, has consistently campaigned.

Professor Joshua Bamfield, who heads the Centre for Retail Research, estimated that most high street shops ended up paying an average around 2.5% of their turnover in business rates – around five times the share paid by large online retailers.

Jim McMahon MP – who chairs the All-Party Parliamentary Group for Town Centres – suggested these problems were further exacerbated by the fact that the warehouses operated by arge online retailers typically qualified for lower business rates, even though – in reality – they were competing with town centre retailers. His suggestion was that rates should be assessed on whether retailers were selling direct to customers (rather than business-to-business) and costed accordingly.

Robert Jenrick MP, the Treasury Minister, explained what the government was doing to reduce the disadvantages smaller retailers face, starting with cutting business rates by around one third – as announced in this year’s Budget.

But can Whitehall and local government do more to help Britain’s high streets? Participants were cautious about some of the commonly-touted solutions – such as transaction taxes on online sales – many of focused more on penalising online retailers (with a tax that will most likely be passed on to customers) rather than actively supporting high street shops per se.

Neena Bhati, Head of Campaigns for ‘Which?’, explained how the consumer affairs agency was campaigning against bank closures and for better access to cashpoints both of which – according to both customers and business-owners – were crucial to the health of the high street. Mary Portas also had some thoughts on the matter – starting with the definition of ‘high street’ itself.

Mary explained how technology, lifestyle changes and consumer habits meant that it was no longer accurate to limit our definition of the high street purely to retailers. Increasingly people were looking to their town centres to provide lifestyle services – things like yoga studies, crèches and places of learning – all of which were crucial to bringing the footfall on which shops relied. These services should also be considered when politicians were designing schemes to support the high street, such as rate relief.

The key to success, she explained, was for cities and towns to develop a compelling vision for how their high street should operate – one which brought together politicians, shopkeepers, business owners and landlords in understanding how it could be done. Get that right, she suggested, and all other things will follow.